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21 members of Arizona National Guard indicted

PHOENIX -- Twenty-one members of the Arizona Air National Guard have been indicted, accused of falsifying military records to bilk the federal government out of hundreds of thousands of dollars, Arizona Attorney General Tom Horne said Monday.

21 members of Arizona National Guard indicted

Eight officers and 13 enlisted members of the 214th Reconnaissance Group of the Arizona Air National Guard between November 2007 and September 2010 allegedly used fake home addresses to receive money meant for military members on short-term orders.
KPNX-TV, Phoenix

Guard members face felony charges for allegedly bilking $1.4 million in federal funds.

Arizona Attorney General Tom Horne, center, announces the indictments of 21 members of the Arizona Air National Guard, accusing eight officers and 13 enlisted men and women of falsifying records to fraudulently receive extra pay, during a news conference in Phoenix on Monday, Oct. 21, 2013. Brig. Gen. Michael T. McGuire the adjutant general of the Arizona National Guard, is at left and Annette Bartlett, assistant special agent in charge for the FBI, also attended.(Photo: Ross D. Franklin, AP)

Story Highlights

They are accused of receiving money meant for military members on short-term orders

Charges include fraud, conspiracy, money-laundering and theft

All of the defendants belonged to group that operates unmanned aircraft

PHOENIX -- Twenty-one Arizona National Guard airmen who were once responsible for top-secret Predator drone flights over Iraq and Afghanistan now face felony charges for allegedly bilking $1.4 million in federal funds through a phony expense scam.

Arizona Attorney General Tom Horne on Monday announced the indictment of retired Col. Gregg Davies, seven other officers and 13 enlistees accused of falsifying home addresses so they could collect expenses meant for personnel on short-term assignments.

Because some of the accused had not been notified Monday, Horne withheld names of defendants other than Davies. Prosecutors said charges include fraud, conspiracy, operating an illegal enterprise, money-laundering and theft. Some airmen could face prison sentences of up to 12½ years. The accused were not arrested, but have been sent summonses for an Oct. 25 arraignment in Pima County (Ariz.) Superior Court.

Horne said he is "committed to the prosecution of individuals who fraudulently collect taxpayer money." He said Davies faces the most serious charges because he allegedly facilitated the conduct of others. "In any group, no matter how good the group is, you're going to have a small percentage who are dishonest," he added.

Lee Stein, an attorney for Davies, said his client was surprised by the criminal charges.

"Colonel Davies has served his country for over 31 years with dignity and honor fighting the Global War on Terror from Tucson," Stein wrote in an e-mail. "In light of his history of distinguished service, this indictment is both disappointing and bewildering."

“In light of (Davies') history of distinguished service, this indictment is both disappointing and bewildering.”

Lee Stein, attorney for Col. Gregg Davies

Stein said he had not had a chance to review the indictment Monday so could not discuss its substance. "But Colonel Davies believes in this country," Stein said, "and has confidence that justice will prevail."

Retired Lt. Col. Michael "Kav" Kavanaugh, a former member of the Predator unit, has previously told The Arizona Republic that allegations of fraud are untrue and unfair. On Monday, Kavanaugh referred questions to his attorney, Jordan Green, who noted that the investigation has been going on for more than three years. Green said his client will "finally get an opportunity to clear himself in a court of law."

About 200 personnel work in the 214th Predator Group, also known as "The Black Sheep," which was formed in 2007 with many of the airmen brought to Tucson from other locations.

The alleged conspiracy occurred from 2007 to 2010 and involved Air Guard personnel who were on federal assignment, paid with U.S. tax dollars. According to prosecutors, a majority of the defendants collected more than $100,000 each in improper expenses. The total loss is estimated at $1.4 million.

U.S. Air Force auditors first uncovered the alleged scheme in 2009, and reported at least two dozen Tucson airmen had submitted false temporary duty, or TDY claims. Some of the airmen were disciplined and ordered to reimburse the military, while suspected criminal conduct was referred to the FBI and the Air Force Office of Special Investigations.

Air Force policy allows airmen on temporary duty away from home to collect payments for housing, meals, travel and other expenses.

But auditors in 2009 found many accounts contained "admitted fraudulent activity," in some cases authorized by the group commander. "This condition occurred due to a complete breakdown of management controls," they wrote. "The lack of effective procedures allowed 214th RG members to illegally exploit opportunities for personal gain without penalty."

“In any group, no matter how good the group is, you're going to have a small percentage who are dishonest.”

Arizona Attorney General Tom Horne

Horne said some of the defendants collected up to five times their salaries in unwarranted expenses.

Brig. Gen. Michael McGuire, who became commander of the National Guard in September, said only eight of the 21 defendants remain in the organization, and all have been removed from the Predator unit.

The criminal indictments come one year after Arizona Republic articles on National Guard corruption revealed the TDY scandal, and just three months after Maj. Gen. Hugo Salazar retired as Guard commander.

The articles documented a systemic patchwork of criminal and unethical conduct that included sexual abuse, embezzlement, drug-dealing, fraternization, cronyism and failure to discipline.

The newspaper findings were corroborated in May by a Pentagon agency investigation conducted at the request of Arizona Gov. Jan Brewer. That review found that senior leaders in Arizona failed to uphold military standards of integrity in part because they were ethically compromised by their own misconduct.

McGuire, who joined Horne at Monday's announcement of criminal charges, said: "I welcome the efforts of these law enforcement partners to ensure that we receive an accurate view of the facts. ... We fully support the legal process."

Andrew Wilder, spokesman for Brewer, said the governor is grateful to those who exposed fraudulent activity and "supports legal efforts to ensure that people are held accountable for any alleged wrongdoing."